2015 (2) TMI 746 - AT - Central Excise

Refund of excise duty - Period of limitation - Unjust enrichment - Interest on delay in Refund- Held that - The appellant on 01.09.2006 had paid an amount of ₹ 1,92,95,372/- towards their duty liability and penalty under TR-6 challan. When in pursuance of the Tribunal s Final Order dated 2.5.2008, the matter was adjudicated de novo by the Commissioner vide order-in-original dated 17.10.2008, the appellant company s duty liability was determined as ₹ 11,89,303/- with equal amount of penalty under Rule 173 Q (1). The appellant filed a refund application under Section 11 B of the Central Excise Act, 1944 on 21.10.2008 before the Asstt. Commissioner and the Asstt. Commissioner vide order-in-original dated 13.01.2009, after appropriating the duty demand of ₹ 11,89,303/- and penalty of same amount and also the penalty of ₹ 2 Lakh each on Shri T.K. Diwan and Shri D.N. Gupta , held that balance amount is refundable. However, on appeal being filed to the Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dated 17.03.2009 held that the duty refund of ₹ 88,72,686/- is not hit by bar of unjust enrichment and ordered its refund along with interest payable under the law. No appeal has been filed by the Department against the Commissioner (Appeals) order dated 17.03.2009. In our view, the letter dated 30.03.2009 of the appellant company addressed to the Asstt. Commissioner reminding them for the refund of this amount along with interest in pursuance of the Commissioner (Appeals)s order dated 17.03.2009, cannot be treated as fresh refund application and, therefore, the Asstt. Commissioners order refusing the interest and order of the Commissioner (Appeals) dated 6.11.2009 upholding the Asstt. Commissioners Order are totally wrong and not sustainable. We are of the view that since refund application had been filed on 21.10.2008, the interest on the amount of ₹ 88,72,686/- would be payable for the period of delay starting from the date immediately after the date on which the period of 3 months expired.Decided in favour of appellant.

Summary

Issues:
1. Duty demand and penalty imposition on the appellant by the Commissioner.
2. Tribunal's remand order for de-novo adjudication.
3. Refund application under Section 11 B of the Central Excise Act, 1944.
4. Dispute over interest payable to the appellant for delay in refund.

Issue 1: Duty Demand and Penalty Imposition:
The appellant, a manufacturer of various products chargeable to central excise duty, faced allegations of clearing dutiable goods as exempted ones. The Commissioner confirmed a duty demand of Rs. 88,72,686/- and imposed penalties. The Tribunal remanded the matter for de-novo adjudication, leading to further confirmation of duty demands and penalties. Subsequently, the appellant made payments to comply with the provisions, leading to appeals, restoration, and further proceedings.

Issue 2: Tribunal's Remand Order:
After remand by the Tribunal, the Commissioner confirmed a reduced demand against the appellant with penalties. The appellant sought a refund under Section 11 B of the Central Excise Act, 1944. The Asstt. Commissioner appropriated a portion of the amount and ordered a refund of the rest. The Commissioner (Appeals) upheld the refund of duty but initially refused a refund of Rs. 88,72,686/- due to unjust enrichment. However, on appeal, the Commissioner (Appeals) ordered the refund of duty along with interest, which was not paid promptly.

Issue 3: Refund Application Dispute:
The appellant contended that interest was payable on the refund amount as per the Commissioner (Appeals)'s order. The Department argued against any interest liability due to no delay in refund. The Tribunal analyzed the payment history, adjudication, and refund process. It concluded that the appellant's reminder letter for interest cannot be considered a fresh refund application. The Tribunal set aside the previous orders refusing interest and directed the Department to pay interest under Section 11 BB of the Central Excise Act from the applicable date.

This judgment addressed multiple issues related to duty demands, penalties, refund applications, and interest payments in a detailed and comprehensive manner. The Tribunal clarified the legal position regarding the refund process, interest liabilities, and the significance of timely compliance with statutory provisions.